NFT (non-fungible token) marketplace OpenSea’s surge past decentralized finance protocol Uniswap as the biggest platform for Ethereum use is a critical signpost for the NFT community. The record growth has been powered undoubtedly by OpenSea’s cross-platform integration with Ethereum and Polygon. OpenSea CEO Devin Finzer says more such integrations are in the works. OpenSea is already the largest marketplace for NFTs including digital art, collectibles, domain names, gaming items, event tickets, and other assets backed by blockchain.
Looking back, such valuations are no surprise for OpenSea at a time when Ethereum-based virtual stone EtherRock whose makers profess “no value other than the pride of owning one” is auctioning for $200,000 apiece at a floor price of $100,000. OpenSea also hosts these ‘pet rocks’ or NFT collectibles created in 2017. They hit sky-high valuations following the unrelated real-world event in which auction house Christie’s sold ‘The First 5000 Days,’ a blockchain-based digital collage created by Australian digital artist Beeple, for a whopping $69.3 million earlier this year.
With the NFT world in the midst of an epic churn, OpenSea raised $100 million in an institutional funding round in July 2021 on a valuation of $ 1.5 billion, making it a unicorn. Andreessen Horowitz alias A16z led the funding round along with angel investors Michael Ovitz (cofounder of CAA) and Ashton Kutcher, actor-investor.
OpenSea saw more than $1.9 million in gas spend (transaction fees, a measure of Ethereum usage) on a single day last week. In comparison, Uniswap V2 and V3 registered transaction fees amounting to $1.57 million.
The New York-based NFT marketplace is projected to touch a volume of $1 billion in August with unique users surging to 300,000, according to Glassnode data site. Finzer’s remark in a GamesBeat interview that his team was expecting fundamental changes in the internet economy seems to have come true sooner than expected. The mushrooming of NFT minting projects including Space Poggers, Sand Frogs District, and Pudgy Penguins promise to make OpenSea, which is a secondary marketplace for them, all the busier. He is certain that the emergence of NFTs is a paradigm shift that occurs once in a couple of decades.
OpenSea’s decision to remove gas fees for NFT creators, sellers, and buyers will be a further boost to the marketplace at a time when startups are entering the NFT space in a big way. OpenSea has vowed to reduce transaction fees in the NFT space. Already, the integration of Polygon, the Layer-2 Ethereum platform for users of ether, has helped cut gas costs. Finzer reveals that the future integration of cryptocurrencies Tezos, “designed to evolve,” and Flow, the “blockchain for open worlds” designed by the CryptoKitties team, will add to the marketplace’s growth.
The NFT marketplace saw digital assets transactions worth $160 million in June alone, marking a 45-fold increase in volume in the first half of 2021 from the January sales of a mere $8 million. Other developments like the emergence of new esoteric ventures including the avatar projects Bored Ape Yacht Club, Hashmasks, and Meebits are causing an NFT market upheaval.
To Cuy Sheffield, head of payment giant Visa’s crypto division, NFTs present a major opportunity for wealth-building for historically disadvantaged groups. He sees blockchain-based collectibles as a “most exciting new avenue” that has the potential to trigger a “Black Digital Renaissance” for creating and capturing dollars worth billions for Black communities over the next decade.
Launched in 2017, what OpenSea did right was investing in and scalability and interoperability of cross-chain marketplace which has remained the bedrock of the company’s vision to usher in Web3.
The confidence of investors in the OpeanSea strategy was evident in it being able to rustle up a $2-million round within a few months of launch in 2017 from Founders Fund. In March 2021, the firm notched up a $23-million institutional round that A16z led, with several existing investors and angels including Mark Cuban, Ron Conway, Belinda Johnson, Ben Silbermann, Naval Ravikant, and many more participating.
Dune Analytics says OpenSea is the top NFT platform now capturing 97% of the USD value transferred on a monthly basis among NFT markets that also include Foundation, Makersplace, Knownorigin, Rarible, SuperRare, and Asyncart. They together participated in transfers amounting to $356 million with OpenSea and SuperRare capturing the top values.
No wonder Finzer is beyond himself when talking about the present time and the rise of NFTs. He compares it with the classical Renaissance period when art found a new plane of expression.